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Business Principles

CHICAGO AUTOMOBILE TRADE ASSOCIATION MEMBERS AGREE TO:

  • Promote and maintain honesty and dependability in our business operations and to avoid deception and fraud.
  • Employ truth and accuracy in our advertising and selling of automotive products.
  • Stand by any guarantee given with the sale and service of motor vehicles.
  • Strive constantly to improve our business methods and ethics and to maintain fair competition to the end that the public will be better served.
  • Refrain from the performance of any act which would be injurious or detrimental to the automobile-retailing industry or contrary to the public interest.

Letter from 2017-18 Chairman, Ray Scarpelli Jr.

2018-19-CATA-Exec-Board
2018-19 CATA Officers (clockwise from left, JC Phelan, Kevin Keefe, Tony Guido, Ray Scarpelli, Jr., Bill Haggerty and Dave Sloan.
 
DEAR FELLOW CATA MEMBER:
 
As my father and my brother, Mark, surely said before me now — in 1997 and 2008, respectively — it has been an honor to serve as chairman of this fine association. The Chicago Automobile Trade Association is one of the nation’s oldest dealer associations, predating even the National Automobile Dealers Association by 13 years.
 
At a time in 1904 when just 8,000 vehicles traveled the nation’s roads, local dealers formed the CATA to advance business principles as relevant today as then, such as promoting honesty and dependability in dealer operations, and employing truth and accuracy in advertising and selling automotive products.
 
Much transpired locally during the past 12 months, as the CATA continues to work for the interests of its members.
 
Unionized technicians and their dealership employers endured an entirely avoidable weeks-long strike in the late summer of 2017, after the IAM 701 technicians signaled from the beginning of negotiations that they intended to picket. The work disruptions hurt both employers and the workers, as such walkouts usually do. They also damage relations among people who continue to work together. In the end, Journeyman technicians agreed to $1 hourly wage increases in each of the collective bargaining agreement’s four years.
 
Sadly, two dozen members of the New-Car Dealers Committee broke from the ranks and struck interim agreements with their technicians ahead of the contract finalization. For their actions, those dealers’ CATA memberships were suspended for two years. The suspensions are regrettable, but the interim agreements caused the other striking technicians to take longer to agree to a new contract.
 
At this writing, negotiations with Teamsters Local 731 are unfolding in advance of that union’s collective bargaining agreement’s July 31, 2018, expiration. Let us all hope that those negotiations experience a softer landing than with 701.
 
On the legislative front, the CATA worked with state lawmakers to pass a bill which prevents manufacturers from forcing dealers to remodel their stores twice within 10 years. The law also prohibits manufacturers from forcing a dealer to use a manufacturer-designated vendor for building-improvement materials if the dealer can find substantially similar materials at a lower cost, and to have a manufacturer consider local factors in the dealer's market area when evaluating a dealer's sales performance as part of the termination process.
 
The 2017 law also halts the manufacturer from exercising a right to buy the franchise from a selling dealer unless several steps are taken, and it forbids a manufacturer from rescinding sales incentives paid to a dealer whose customer exports a vehicle out of the country, unless the manufacturer can prove that the dealer knew or should have known that the vehicle would be exported.
 
State lawmakers also passed legislation that provides for a limited implied warranty on most used vehicles sold by dealerships. Used cars in Illinois no longer can be sold with "as is" language on the used-car Buyers Guide. Instead, the Buyers Guide must carry "implied warranty" language, unless a dealer offers express warranty coverage that is equal to or greater than the implied warranty.
 
A renewed effort by Illinois Sen. Jim Oberweis, R-Sugar Grove, to open Illinois dealerships to Sunday sales stalled once again without a floor vote. His attempt this year, legislation which he dubbed the Freedom to Open on Sundays Act, received a hearing but never an up/down vote. 
 
When the General Assembly begins its next session in January 2019, there likely will be 40 or more new state lawmakers in office; that number customarily is but a handful. And that’s not even counting those who might be ousted at the ballot box in a few months. Relationships will be key.
 
We continue to ask our fellow dealers about positive relationships they have with state and local lawmakers, as those relationships might advance legislation to benefit dealers. Please convey any such relationships to dealermail@cata.info. Franchised dealers have demonstrated that we can have a significant impact on the political and legislative system if we organize and work together. Dealers must focus on group efforts when it comes to politics.
 
Our successes on the national stage rely on efforts by the NADA, and I wholeheartedly encourage all my fellow dealers to contribute to NADA PAC, which works for our interests through lobbying. Dealers in what the NADA calls Metropolitan Chicago and which it defines as Cook, Lake and DuPage counties in Illinois, met the group’s NADA PAC fundraising goal in 2017 for the first time in years. A recent win: the rescission of the Consumer Financial Protection Bureau's flawed 2013 indirect vehicle financing guidance.
 
Other lobbying helped turn back a U.S. Senate bill to ground the sale or wholesale by a dealer (but not a private sale) of any used car under open recall. Such legislation is overbroad because most recalls do not require the drastic step of grounding.
 
In an important decision in April 2018, the U.S. Supreme Court ruled that auto service advisers (also commonly referred to as "service writers") are exempt from overtime pay under the Fair Labor Standards Act ("FLSA"). The ruling answered the long-standing question as to whether auto service advisers are covered by the FLSA's "salesman" overtime exemption, which includes "any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles." 
 
This was a big win for auto dealerships. While the Court's opinion covers any claims under the FLSA, auto dealerships should keep in mind that state law might be different from federal law and should be consulted. For example, in Illinois, Franczek Radelet, the CATA's employment relations counsel, continues to advise dealerships to structure their service adviser pay plans to comply with the 7(i) sales exemption, which is expressly included in the Illinois Minimum Wage Law.
 
Leasing activity in Illinois continues upward, as more consumers take advantage of the 2015 change in how the state assesses sales tax on leases. Dealers are encouraged to tell their manufacturer reps about the CATA’s efforts to promote leasing in its DriveChicago radio and digital ads, and to ask the reps to implement programs that support leasing.
 
Other DriveChicago messages include an encouragement to have vehicles serviced at new-car dealerships, plus seasonal messages about the Chicago Auto Show in February, the Barbecue for the Troops fundraiser in July, and other highlights of positive efforts by our dealers in their communities.
 
A coming redesign of the DriveChicago web portal, which features the membership’s 120,000 new- and used-vehicle inventories, will focus on mobile enhancements. The current design, introduced in 2013, gave precedence to desktop users, but 60 percent of today’s traffic on the portal comes from consumers using smartphones.
 
The BBB-CATA Advertising Review Program, operated with input by your association and the Better Business Bureau of Chicago and northern Illinois, continues to perform its mission of keeping dealerships compliant with the AG’s office over dealer ads. There has not been a major lawsuit against a dealer in a decade. When they spot an advertising infraction, BBB reps send letters to the dealer, to try to clean up the message. If dealer actions aren’t taken, the matter is forwarded to the AG. The BBB sent 201 letters to dealers in 2017, and just 10 cases were referred to the AG. The BBB noted that most violations usually involve internet-based ads.
 
The area's weather grabbed all the headlines in July 2017, and the repeated storms left many dealerships scrambling to keep dry. Our employees, similarly, struggled to keep rising rainwaters out of their homes. Since 1992, the NADA has operated a fund to help dealership employees who have been impacted by natural disaster — flood, hurricane, tornado, fire, and more — and I urged affected area workers to appeal for the grant money. To further relief efforts, the CATA moved to match any grants that the NADA awarded to area dealership employees.
 
The CATA board of directors also voted to donate $30,000 to dealership employees impacted by Hurricane Harvey, which struck the Houston, Texas, metropolitan area in August 2017. In a four-day period, many areas received more than 40 inches of rain, causing unprecedented flooding.
 
The board also contributed $12,500 to Northwood University to help revamp and update the school’s automotive marketing curriculum. The association also supports students who attend Northwood with tuition scholarships. The current undergrad, Edward Mavromatis, hopes to graduate from the Michigan campus in 2019.
 
The association’s Chicagoland Dealers Care program, created in 2008 to build upon the charitable efforts of dealer members in their communities, supported a number of nonprofits over the past year. Most received the maximum $1,500 grant: Plant with a Purpose, Salvation Army, St. Joseph Services, Midwest Brain Injury, Student Excellence Foundation, DuPage PADS, and the Inside Out Club.
 
More than 100 dealerships joined in the USO of Illinois fundraiser, Barbecue for the Troops in July 2017, and they raised $155,000, a high-water mark for the five years our dealer body has joined in the fundraiser. Over that half decade, more than $570,000 has been raised for troops and their families. Indeed, the USO of Illinois now identifies Barbecue for the Troops as its second greatest fundraiser of the year. All proceeds collected are donated to USO programs that support deployed troops, military families, wounded, ill and injured troops and their caregivers, and families of the fallen.
 
At this writing, the total raised in 2018 was still being determined. Turtle Wax, a new sponsor for the fundraiser, contributed $25,000 to the amount raised collectively by the 2018 barbecues.
 
I want to congratulate my fellow director, John Hennessy, who, as chairman of the 2018 Chicago Auto Show, oversaw a world-class event. The show floor shined, and the First Look for Charity gala raised nearly $3 million for area nonprofits.
 
An elderly woman last summer sued a member dealer for selling her a car she didn’t want, and the Illinois attorney general’s office investigated the matter. The AG is sensitive to transactions involving the elderly because they might have mental disabilities. Dealership personnel need to be sensitive, too, because such cognitive shortcomings aren’t always distinguishable. In either case, however, such a lawsuit always plays big in the media, so dealership personnel must make sure elderly customers understand the transactions they undertake.
 
The Chicago area has become a hotbed for identity thieves. Local dealers have been impacted, but so too have dealerships from across the country by shipping new vehicles — often valued at $50,000 and more — to persons with fake identification. The transactions mostly have been conducted online.
 
Dealers can protect themselves by thoroughly examining online loan applications and related paperwork and instituting a waiting period before delivering the vehicle. During the waiting period, search Google Earth to look at the property on the paperwork, to see if it looks vacant or dilapidated. Fraudulent purchasers often ask for deliveries to be sent to a "work" address that is a vacant building.
 
We were saddened by the passing in March 2018 of former CATA chairmen Steve Foley and Bill Stasek, and the board moved to donate on their behalf to Catholic Charities of the Archdiocese of Chicago and to The Cradle, respectively.
 
We have enjoyed a relatively stable economy and business climate for years, and when things are good, why worry, right? Well, in our industry, we tend to be very reactionary. Remember that good times are the best times to prepare for bad times.
 
My best wishes to all our members for success in the year ahead!
 
Sincerely,
Ray Scarpelli Jr.
2017-2018 Chairman